MANILA, Philippines - The local  franchising industry is proving to be resilient, with no signs of slowing down.

The industry, made up mostly of medium-sized entrepreneurs is steadily growing, and with the uncertainty in global economic recovery, it is already  outpacing the expansion of foreign companies operating in the Philippines.

Paulo Tibig, president of the Association of Filipino Franchisers Inc. (AFFI), said the projected gross sales of its members is expected to hit P72.6 billion this year, or 20% higher from 2009's P60.5 billion.

"We have not been affected as much by the economic slowdown, there was a bit of a  slack in the first quarter, but there has been a rebound mid-way in the second quarter," said Tibig.

AFFI's membership has gone up as well to 119 in the first half from 80 members in  end-January. To date, its members have an  aggregate 6,000 outlets, and this is seen to be expanding before the end of the
year.  The industry has also created nearly 35,000 jobs.

"There is a strong interest to go into franchising, especially from overseas Filipino workers," said Tibig.

Even the business concepts are becoming diverse, although the food business is still dominant with 55% of AFFI's members engaged in this sector.

In recent years however, the non-food sector, especially IT and the services sectors are catching up, said Teresita Ngan Tian, an adviser of AFFI. 

"Some of our members are going into the franchising of salons, spas, even schools where the operating costs are more stable compared to the food business."

What is even more encouraging, is that companies that have established themselves in Metro Manila, are expanding in key  growth areas in the provinces.

Tian's company, pizza chain Lots'A Pizza which now has 151 stores all over Metro Manila, has tied up with Visayas-based Julie's Bakeshop to set up at least  6 pizza outlets in Cebu.

"We have a master franchisee in the Visayas which is mapping out areas where  there is a real chance for our company to grow. We will be replicating that eventually in Mindanao," said Tian.

Some members, are already gaining headway in the global arena.

FoodAsia Corp. which runs the franchise "Bibingkinitan" is currently negotiating  to open its first offshore branch in Jakarta, Indonesia.

"We are not only targeting the Filipino market which is a captive market, but also the mainstream market," said Richard Sanz, president of FoodAsia and executive vice president of AFFI.

Tibig said other members like Goto King, Figaro, Fiorgelato, and Aquabest are branching out in Southeast Asia. Potato Corner is gaining ground in the US, not just among the Filipino community, but in the mainstream market as well.

Still, more of its members are looking inward for their expansion.

"That's because there is still a lot of room to grow locally," said Tibig.

He cited the emergence of those in the informal business or underground sector who are shifting into the legitimate or formal business.

"A lot of them are encouraged by the business models that our members have started and are now growing."

Getting off the ground

With interests in franchising unlikely to  peter out anytime soon, Tibig said AFFI is holding its 9th franchise show on September 16 to 19 on a much bigger scale.

AFFI Vice President for public relations and marketing Neil Delgado said that floor space at the World Trade Center has been doubled this year to accommodate more members wanting to showcase their products and seal new deals with aspiring franchisees.

"This year's show is a testament to that growth with 380 exhibitors, representing  more than 120 unique business concepts from all over the country. This is a 100% increase from last year's show," said
Delgado.

The AFFI show which will also feature  lectures by franchising experts, is expected  to draw some 25,000 visitors, a lot of  them first-time visitors, added Delgado.

"We have in recent years, created  awareness and interest in the possibilities that franchising has to  offer."

But while many are interested, most are stopped in their tracks because they do not have enough information on how to go  about establishing a business, said Sanz.

Many, do not have the financial muscle to support a business and are not that aware of other funding options that they can tap, added Sanz.

"This is where membership in AFFI can open doors for aspiring entreprenuers. Capital and know-how are both crucial to starting and sustaining a business, and unfortunately both are not easy to find."

Sanz explained that AFFI which sets strict criteria for its members, ensures that entrepreneurs choose only credible and legitimate franchises. It has also laid  out simple requirements for applicants.

AFFI over the years, created strong links with banks as well as goverment agencies such as the Department of Trade and Industry (DTI) and Go Negosyo to educate entrepreneurs.

"These partnerships, hopefully, will help  entrepreneurs avoid the same pitfulls we  ourselves have experienced first hand," said Sanz.

Self-regulation

Another issue that AFFI hopes to address  in this year's show is the recent moves by the goverment to issue guidelines for the franchise industry.

The DTI said the guidelines intend to  protect budding franchisees from  fly-by-night franchisers.

The trade department said the guidelines would be outlined in the form of a memorandum of agreement between the DTI and franchise groups like AFFI and the Philippine Franchise Association.

Tibig said however, that AFFI is more inclined to police its own ranks, adding that it had on at least 2 instances, expelled "abusive" members.

Sanz said that a goverment-imposed guideline could stifle the industry.

"We are positioning the Philippines as Asia's franchising hub. Right now, the  country has the largest number in the region of homegrown franchises. We certainly want to weed out potential problems, but we have to look for more middle-ground that would ensure that franchisees are protected without hurting
the industry's growth."